[House Report 114-713]
[From the U.S. Government Publishing Office]


114th Congress   }                                       {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                       {     114-713

======================================================================



 
                   INNOVATION IN OFFSHORE LEASING ACT

                                _______
                                

 September 6, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Bishop of Utah, from the Committee on Natural Resources, submitted 
                             the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5577]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 5577) to amend the Outer Continental Shelf Lands 
Act to authorize the Secretary of the Interior to conduct 
offshore oil and gas lease sales through Internet-based live 
lease sales, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Innovation in Offshore Leasing Act''.

SEC. 2. INTERNET-BASED OFFSHORE OIL AND GAS LEASE SALES.

  (a) Authorization.--Section 8 of the Outer Continental Shelf Leasing 
Act (43 U.S.C. 1337) is amended by adding at the end the following:
  ``(q) Internet-Based Oil and Gas Lease Sales.--
          ``(1) In general.--In order to modernize the Nation's 
        offshore leasing program to ensure the best return to the 
        Federal taxpayer, reduce fraud, and ensure a fair and 
        competitive leasing process, the Secretary may conduct lease 
        sales under this section through Internet-based, sealed-bidding 
        methods.
          ``(2) Sale requirements.--Sales conducted under paragraph (1) 
        shall ensure--
                  ``(A) a publicly and freely accessible digital 
                delivery of the bid reading process, such as live 
                Internet streaming, and an option for bidders to submit 
                bids electronically;
                  ``(B) a bidder verification process that discloses to 
                bidders, by no later than 5 p.m. Central Time of the 
                day before each sale, a list of all bids submitted 
                (including the person submitting each bid) on each 
                lease tract without disclosing bid amounts;
                  ``(C) the ability for a bidder to correct a possible 
                misreading of a submitted bid;
                  ``(D) a designee from within the Office of the 
                Solicitor of the Department of the Interior to act as 
                an independent, third-party observer who will be 
                present during the bid reading process to prevent 
                wrongdoing, independently certify the bidding process, 
                and maintain transparency;
                  ``(E) data security measures to ensure bidder data is 
                kept secure; and
                  ``(F) a participant survey soliciting voluntary 
                feedback from bidders on the bidding process.
          ``(3) Transparency in sale-day statistics.--
                  ``(A) Requirement.--The Secretary shall publicly 
                disclose statistical data regarding each lease sale 
                under this subsection, on the day the sale is executed.
                  ``(B) Included data.--Among data disclosed, the 
                Secretary shall include--
                          ``(i) the total value of high bids;
                          ``(ii) the number of tracts offered;
                          ``(iii) the number of acres offered;
                          ``(iv) the number of tracts receiving bids;
                          ``(v) the number of acres receiving bids;
                          ``(vi) the total number of bids;
                          ``(vii) the average number of bids per tract;
                          ``(viii) the total number of bidders 
                        participating;
                          ``(ix) bidding statistics by water depth;
                          ``(x) the name of the entity that submitted 
                        each bid, the amount of the bid, and the tract 
                        for which the bid was submitted;
                          ``(xi) of tracts receiving bids, the number 
                        of bids per tract by water depth;
                          ``(xii) the tract receiving the greatest 
                        number of bids;
                          ``(xiii) the tract receiving the highest bid; 
                        and
                          ``(xiv) any other statistical data that may 
                        be disclosed in accordance with this Act.
                  ``(C) Data transparency.--The Secretary shall ensure 
                all data regarding lease sales under this subsection is 
                publicly available and easily accessible, free of 
                charge, on the Internet, including for download and 
                aggregation in machine-readable format.''.
  (b) Modernizing Leasing Through Collaboration.--
          (1) In general.--Before conducting the first Internet-based 
        lease sale under the amendment made by this section, the 
        Secretary of the Interior shall issue a request for information 
        from each company present for bidding at the ten most recent 
        oil and gas lease sales conducted by the Secretary under the 
        Outer Continental Shelf Lands Act, in order to provide the 
        bidding public sufficient opportunity to share innovative 
        ideas, methods, and concerns regarding Internet-based leasing.
          (2) Integration of information.--The Secretary shall review, 
        evaluate, and integrate suggestions and concerns collected 
        under paragraph (1) as the Secretary works to modernize the 
        offshore leasing process through Internet-based leasing 
        options.
          (3) User workshop.--The Secretary shall conduct not less than 
        one user workshop with viable bidders prior to conducting an 
        Internet-based lease sale to provide the bidding public with an 
        opportunity to beta test any prototype of an Internet-based 
        leasing platform.
  (c) Deadline for Gulf of Mexico Lease Sale.--Not later than 18 months 
after the date of the enactment of this Act, the Secretary of the 
Interior shall conduct at least one Internet-based lease sale under the 
amendment made by subsection (a) for leasable acreage in the Gulf of 
Mexico.
  (d) Evaluating Internet-Based Offshore Leasing.--Not later than 90 
days after the third Internet-based lease sale conducted under the 
amendment made by subsection (a), the Secretary of the Interior shall 
analyze all such Internet-based lease sales and transmit to Congress a 
thorough analysis of the sales. The analysis shall include--
          (1) estimates of increases or decreases in such lease sales, 
        compared to sales conducted by non-Internet-based bidding, in--
                  (A) the number of bidders;
                  (B) the average amount of bids;
                  (C) the highest bid; and
                  (D) the lowest bid;
          (2) an estimate of the total cost or savings to the 
        Department of the Interior as a result of such sales, compared 
        to sales conducted by non-Internet-based bidding;
          (3) voluntary and anonymous feedback from persons 
        participating in such sales, on the Internet-based leasing 
        process and potential areas for improvement in such sales; and
          (4) an evaluation of the demonstrated or expected 
        effectiveness of different structures for lease sales that may 
        provide an opportunity to better maximize bidder participation, 
        ensure the highest return to the Federal taxpayers, minimize 
        opportunities for fraud or collusion, and ensure the security 
        and integrity of the leasing process.

                          Purpose of the Bill

    The purpose of H.R. 5577 is to amend the Outer Continental 
Shelf Lands Act to authorize the Secretary of the Interior to 
conduct offshore oil and gas lease sales through Internet-based 
live lease sales.

                  Background and Need for Legislation

    Under the Outer Continental Shelf Lands Act (OCSLA), the 
Secretary of the Interior is authorized to conduct sealed-bid 
lease sales for oil and natural gas leasing on the 1.7 billion 
acres of U.S. outer Continental Shelf lands. The Secretary 
conducts these lease sales in accordance with the lease sale 
schedule presented every five years in the Outer Continental 
Shelf oil and natural gas leasing program, also known as the 
Five-Year Plan. A lease sale cannot be held unless it has been 
included in the Five-Year Plan. Lease sales are currently 
conducted in a sealed-bid format, with bids opened and read 
aloud at the Superdome in New Orleans, Louisiana. As of the 
July 2016 Combined Leasing Report, of the 1.7 billion offshore 
acres, only 21 million or 1.2% are currently under lease--for a 
total of 3,948 active leases held offshore.
    To qualify to bid on an OCS lease, you must be a U.S. 
citizen, an alien lawfully admitted for permanent residence, a 
private, public or municipal corporation, or an association of 
such aforementioned qualifying candidates. To participate in a 
lease sale, a bidder must submit qualifying documents and be 
certified by the Bureau of Ocean Energy Management (BOEM), 
which includes meeting specific bonding requirements to make 
sure the bidder is able to meet all potential present and 
future lease obligations, including costs to plug abandoned 
wells, remove platforms and other facilities, and restore the 
lease to its original condition.
    Leading up to a lease sale, BOEM will issue a Proposed 
Notice of Sale roughly four months prior to the sale date as 
well as a Final Notice of Sale no less than 30 days before the 
date of the lease sale. Lease sale notices are published in the 
Federal Register, allowing yet another opportunity after the 
multiple public comment periods for the Five-Year Plan for 
public comment on the specific lease sale. These sale notices 
contain details regarding the date, time, and location of the 
lease sale, as well as bidding instructions, maps of the lease 
blocks that will be available during the sale, lease terms 
(length of lease, rental fees and royalty rates) and other 
conditions or stipulations. A lease block is a three-mile by 
three-mile block, totaling 5,760 acres.
    The sale notice also includes details of any site-specific 
stipulations for eligible lease blocks. For instance, in the 
most recent Central Gulf Lease Sale (#241) on March 23, 2016, 
the Final Notice of Sale makes note of the National Oceanic and 
Atmospheric Administration's proposal to expand the boundaries 
of the Flower Garden Banks National Marine Sanctuary (FGBNMS), 
advising bidders that ``. . . certain activities related to oil 
and gas exploration and development are already prohibited 
within a significant portion of each of the banks recommended 
for expansion . . .''. While the expansion of the FGBNMS is not 
even through the Environmental Impact Statement phase, BOEM 
notified bidders of potential future limitations on oil and gas 
activities in lease blocks that are impacted by this proposed 
expansion.
    When an eligible company determines that it would like to 
bid on a lease block, it fills out a bidder form which fully 
describes the block and area number, the area name and/or map 
number, the company's name, its BOEM-assigned company number, 
and the amount of the bid stated in whole dollars. 
Additionally, companies are required to make a bid deposit in 
accordance with requirements published in the Final Notice of 
Sale--generally 20 percent of the bid amount. A successful 
bidder must transfer 20 percent of the successful bid amount by 
electronic funds transfer (EFT) to BOEM in one lump sum to the 
New York Federal Reserve Bank no later than 2:00 p.m. Eastern 
Standard Time on the day following the bid opening. Because 
BOEM must ensure that each successful bid meets fair return 
thresholds to be leased, the funds are deposited into an 
interest-bearing account and if the bid is rejected, the funds 
plus interest earned are transferred back to the bid submitter 
by EFT the next business day after rejection.
    The sealed bid (bid form in a sealed envelope) is received 
by the BOEM Regional Director in the Gulf of Mexico within the 
time limits published in the Final Notice of Sale, generally 
closing at 10:00 a.m. the day before the sale. Sealed bids are 
opened and read aloud in a public place (the Superdome) on the 
date and time specified in the Final Notice of Sale.
    Once BOEM deems a high bid to be acceptable and concurrence 
is achieved with the Department of Justice and the Federal 
Trade Commission, a lease package is delivered to the 
successful company with all necessary information, including 
copies of the lease. A company then must go through the 
permitting process with both BOEM and Bureau of Safety and 
Environmental Enforcement to obtain exploration plan approvals 
and applications for permits to drill a well on the lease block 
that has been acquired. The company must pay rental fees to 
BOEM for the duration of the lease if or until the company is 
able to reach commercial production, at which point the company 
then must pay a royalty to the federal government for all oil 
and natural gas developed from the lease. If a company does not 
conduct exploration or development activities on a lease within 
a specific period of time in accordance with the lease 
agreement, the lease could face cancellation.

                            SALE STATISTICS

    BOEM publishes sale statistics after each sale. Sale 
statistics include total acreage and number of lease blocks 
offered for sale, how many bids were received, how many 
companies were present for bidding, which lease blocks received 
the highest number of competitive bids, the highest bid 
amounts, and other information. For example, the Arctic Lease 
Sale #193 that took place in the Chukchi Sea in 2008 received 
four bids from different companies for Lease Block #6762. Given 
that the bids were sealed and each competing company could not 
see the each other's bid, the bid amounts varied greatly. The 
bids on this lease block range from the highest, at $94 
million, to the lowest, at $104,000. Again, the bid amounts 
received is just one portion of the revenues generated from 
offshore leasing, as the company with the highest bid then must 
pay rental fees and royalties for eventual development on that 
block.

                      CHANGES ADOPTED BY AMENDMENT

    An amendment was offered by the bill sponsor, Congressman 
Garret Graves (R-LA), at the markup on July 13, 2016. This 
amendment reflected several changes requested by the Department 
of the Interior through BOEM as well as recommendations offered 
by witnesses at the hearing on the bill held on July 6, 2016. 
BOEM wanted the option to move forward with new Internet-ready 
capabilities that will allow bidders to submit sealed bids 
electronically rather than delivering the envelope in person, 
so text was included to reflect this addition. Furthermore, 
underlying bill language required a bidder verification process 
that discloses to bidders at least 24 hours before the bid 
reading process a list of bids submitted by all persons on each 
lease tract without disclosing bid amounts. While this is 
currently done for all lease sales, the Natural Resources 
Committee included this as a requirement to ensure this 
important data would continue to be disclosed in the future. 
However, BOEM noted that bids may still be coming in 24 hours 
prior to the sale, and therefore requested that the language be 
amended to require that this information be disclosed by 5:00 
p.m. Central Time on the day before the sale.
    Offshore energy experts testifying at the hearing applauded 
the inclusion of an independent observer to be present for the 
Internet lease sale, but noted that ``. . . by placing the 
Inspector General in an operational role, the legislation may 
inadvertently frustrate the Inspector General's office's 
ability to be independent should they need to investigate an 
irregularity in a future sale.''\1\ For this reason, the 
amendment directs the independent observer to come from the 
Office of the Solicitor of the Department of the Interior.
---------------------------------------------------------------------------
    \1\See Subcommittee hearing at http://naturalresources.house.gov/
calendar/eventsingle.aspx?EventID=400874.
---------------------------------------------------------------------------
    Finally, BOEM requested more time, specifically 18 months, 
to be able to conduct an Internet lease sale that meets all of 
the criteria in the legislation, so the amendment changed the 
deadline to conduct an Internet lease sale from one year to 18 
months. Given that the amendment was adopted by unanimous 
consent and accommodated BOEM's request to further extend this 
deadline, it is the Committee's expectation that BOEM shall 
meet this deadline set by law.

                    GOVERNMENT TRANSPARENCY ENHANCED

    Nothing in the underlying legislation in any way prevents 
any public entity or person from voicing their support or 
opposition to any leasing activity on the United States Outer 
Continental Shelf. In fact, as a result of this legislative 
effort, BOEM announced nine days after H.R. 5577 was ordered 
reported to the House of Representatives by the House Natural 
Resources Committee by unanimous consent on Friday, July 22, 
2016, that the Western Gulf of Mexico Lease Sale 248, to be 
held on August 24, 2016, in New Orleans, Louisiana, would be 
the first federal offshore oil and gas auction broadcast live 
on the Internet. The Committee points out that leading up to 
Lease Sale 248, 18 public meetings were held related to the 
sale and five separate 45-day comment periods were provided to 
allow for public comment and input on this lease sale and 
offshore leasing in general. The Committee commends the August 
24, 2016, lease sale not only because it was conducted as 
planned (unlike other lease sales that were originally included 
in the 2012-2017 Five-Year plan and later canceled for no 
reason), but also because it was the first opportunity where 
the public was able to watch the live-stream of the lease sale 
over the Internet on www.boem.gov. The Committee also looks 
forward to future efforts by the Department of the Interior to 
further integrate innovative solutions that both enhance 
efficiency and foster transparency in the development of our 
Nation's oil and gas resources.

                            Committee Action

    H.R. 5577 was introduced on June 24, 2016, by Congressman 
Garret Graves (R-LA). The bill was referred to the Committee on 
Natural Resources, and within the Committee to the Subcommittee 
on Energy and Mineral Resources. On July 6, 2016, the 
Subcommittee held a hearing on the bill. On July 12, 2016, the 
Natural Resources Committee met to consider the bill. The 
Subcommittee was discharged by unanimous consent. Congressman 
Garret Graves (R-LA) offered an amendment designated 001; it 
was adopted by unanimous consent. No further amendments were 
offered and the bill, as amended, was ordered favorably 
reported to the House of Representatives by unanimous consent 
on July 13, 2016.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation and Section 308(a) of the 
Congressional Budget Act. With respect to the requirements of 
clause 3(c)(2) and (3) of rule XIII of the Rules of the House 
of Representatives and sections 308(a) and 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the enclosed cost estimate for the bill from the Director of 
the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 1, 2016.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5577, the 
Innovation in Offshore Leasing Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5577--Innovation in Offshore Leasing Act

    H.R. 5577 would authorize the Bureau of Ocean Energy 
Management (BOEM) to use Internet-based bidding methods for 
auctions of federal oil and gas leases in the Outer Continental 
Shelf (OCS). Such Internet-based auctions would have to provide 
bidders the option of submitting bids electronically and make 
the agency's reading of the scaled bids available in digital 
formats, such as live Internet streaming. Under this bill, BOEM 
would be required to conduct at least one Internet-based 
auction in the Gulf of Mexico within 18 months after enactment. 
Finally, the bill would direct BOEM to collect, analyze, and 
publish certain information about these auctions.
    Using information provided by the Department of the 
Interior and other agencies, CBO estimates that implementing 
the bill would cost about $2 million over the 2017-2021 period, 
assuming appropriation of the necessary amounts. Firms 
participating in OCS auctions submit sealed bids at rates 
ranging from 300 to 3,000 bids a year, using standardized short 
forms developed by BOEM. CBO expects that the cost of 
developing and operating online systems to process such bids 
would be similar to the costs of other energy data collection 
and bidding systems, such as those used by the Energy 
Information Administration and for OCS auctions of renewable 
energy leases.
    H.R. 5577 could affect offsetting receipts from bonus 
payments, which are treated as reductions in direct spending; 
therefore, pay-as-you-go procedures apply. CBO estimates, 
however, that the net effect on direct spending would be 
negligible because the cost to firms of participating in OCS 
auctions is small relative to the amounts paid for the leases, 
which can range from a few hundred million dollars to more than 
$1 billion a year. Enacting the bill would not affect revenues.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits by more than 
$5 billion in one or more of the four consecutive 10-year 
periods beginning in 2027.
    H.R. 5577 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Kathleen Gramp. 
The estimate was approved by Theresa Gullo, Assistant Direct 
for Budget Analysis.
    2. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to amend the Outer Continental Shelf 
Lands Act to authorize the Secretary of the Interior to conduct 
offshore oil and gas lease sales through Internet-based live 
lease sales.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                       Compliance With H. Res. 5

    Directed Rule Making. The Chairman does not believe that 
this bill directs any executive branch official to conduct any 
specific rule-making proceedings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

OUTER CONTINENTAL SHELF LANDS ACT

           *       *       *       *       *       *       *


  Sec. 8. Leases, Easements, and Rights-of-way on the Outer 
Continental Shelf.--(a)(1) The Secretary is authorized to grant 
to the highest responsible qualified bidder or bidders by 
competitive bidding, under regulations promulgated in advance, 
any oil and gas lease on submerged lands of the outer 
Continental Shelf which are not covered by leases meeting the 
requirements of subsection (a) of section 6 of this Act. Such 
regulations may provide for the deposit of cash bids in an 
interest-bearing account until the Secretary announces his 
decision on whether to accept the bids, with the interest 
earned thereon to be paid to the Treasury as to bids that are 
accepted and to the unsuccessful bidders as to bids that are 
rejected. The bidding shall be by sealed bid and, at the 
discretion of the Secretary, on the basis of--
          (A) cash bonus bid with a royalty at not less than 
        12\1/2\ per centum fixed by the Secretary in amount or 
        value of the production saved, removed, or sold;
          (B) variable royalty bid based on a per centum in 
        amount or value of the production saved, removed, or 
        sold, with either a fixed work commitment based on 
        dollar amount for exploration or a fixed cash bonus as 
        determined by the Secretary, or both;
          (C) cash bonus bid, or work commitment bid based on a 
        dollar amount for exploration with a fixed cash bonus, 
        and a diminishing or sliding royalty based on such 
        formulae as the Secretary shall determine as equitable 
        to encourage continued production from the lease area 
        as resources diminish, but not less than 12\1/2\ per 
        centum at the beginning of the lease period in amount 
        or value of the production saved, removed, or sold;
          (D) cash bonus bid with a fixed share of the net 
        profits of no less than 30 per centum to be derived 
        from the production of oil and gas from the lease area;
          (E) fixed cash bonus with the net profit share 
        reserved as the bid variable;
          (F) cash bonus bid with a royalty at no less than 
        12\1/2\ per centum fixed by the Secretary in amount or 
        value of the production saved, removed, or sold and a 
        fixed per centum share of net profits of no less than 
        30 per centum to be derived from the production of oil 
        and gas from the lease area;
          (G) work commitment bid based on a dollar amount for 
        exploration with a fixed cash bonus and a fixed royalty 
        in amount or value of the production saved, removed, or 
        sold;
          (H) cash bonus bid with royalty at no less than 12 
        and \1/2\ per centum fixed by the Secretary in amount 
        or value of production saved, removed, or sold, and 
        with suspension of royalties for a period, volume, or 
        value of production determined by the Secretary, which 
        suspensions may vary based on the price of production 
        from the lease; or
          (I) subject to the requirements of paragraph (4) of 
        this subsection, any modification of bidding systems 
        authorized in subparagraphs (A) through (G), or any 
        other systems of bid variables, terms, and conditions 
        which the Secretary determines to be useful to 
        accomplish the purposes and policies of this Act, 
        except that no such bidding system or modification 
        shall have more than one bid variable.
  (2) The Secretary may, in his discretion, defer any part of 
the payment of the cash bonus, as authorized in paragraph (1) 
of this subsection, according to a schedule announced at the 
time of the announcement of the lease sale, but such payment 
shall be made in total no later than five years after the date 
of the lease sale.
  (3)(A) The Secretary may, in order to promote increased 
production on the lease area, through direct, secondary, or 
tertiary recovery means, reduce or eliminate any royalty or net 
profit share set forth in the lease for such area.
  (B) In the Western and Central Planning Areas of the Gulf of 
Mexico and the portion of the Eastern Planning Area of the Gulf 
of Mexico encompassing whole lease blocks lying west of 87 
degrees, 30 minutes West longitude and in the Planning Areas 
offshore Alaska, the Secretary may, in order to--
          (i) promote development or increased production on 
        producing or non-producing leases; or
          (ii) encourage production of marginal resources on 
        producing or non-producing leases;
        through primary, secondary, or tertiary recovery means, 
        reduce or eliminate any royalty or net profit share set 
        forth in the lease(s). With the lessee's consent, the 
        Secretary may make other modifications to the royalty 
        or net profit share terms of the lease in order to 
        achieve these purposes.
  (C)(i) Notwithstanding the provisions of this Act other than 
this subparagraph, with respect to any lease or unit in 
existence on the date of enactment of the Outer Continental 
Shelf Deep Water Royalty Relief Act meeting the requirements of 
this subparagraph, no royalty payments shall be due on new 
production, as defined in clause (iv) of this subparagraph, 
from any lease or unit located in water depths of 200 meters or 
greater in the Western and Central Planning Areas of the Gulf 
of Mexico, including that portion of the Eastern Planning Area 
of the Gulf of Mexico encompassing whole lease blocks lying 
west of 87 degrees, 30 minutes West longitude, until such 
volume of production as determined pursuant to clause (ii) has 
been produced by the lessee.
  (ii) Upon submission of a complete application by the lessee, 
the Secretary shall determine within 180 days of such 
application whether new production from such lease or unit 
would be economic in the absence of the relief from the 
requirement to pay royalties provided for by clause (i) of this 
subparagraph. In making such determination, the Secretary shall 
consider the increased technological and financial risk of deep 
water development and all costs associated with exploring, 
developing, and producing from the lease. The lessee shall 
provide information required for a complete application to the 
Secretary prior to such determination. The Secretary shall 
clearly define the information required for a complete 
application under this section. Such application may be made on 
the basis of an individual lease or unit. If the Secretary 
determines that such new production would be economic in the 
absence of the relief from the requirement to pay royalties 
provided for by clause (i) of this subparagraph, the provisions 
of clause (i) shall not apply to such production. If the 
Secretary determines that such new production would not be 
economic in the absence of the relief from the requirement to 
pay royalties provided for by clause (i), the Secretary must 
determine the volume of production from the lease or unit on 
which no royalties would be due in order to make such new 
production economically viable; except that for new production 
as defined in clause (iv)(I), in no case will that volume be 
less than 17.5 million barrels of oil equivalent in water 
depths of 200 to 400 meters, 52.5 million barrels of oil 
equivalent in 400-800 meters of water, and 87.5 million barrels 
of oil equivalent in water depths greater than 800 meters. 
Redetermination of the applicability of clause (i) shall be 
undertaken by the Secretary when requested by the lessee prior 
to the commencement of the new production and upon significant 
change in the factors upon which the original determination was 
made. The Secretary shall make such redetermination within 120 
days of submission of a complete application. The Secretary may 
extend the time period for making any determination or 
redetermination under this clause for 30 days, or longer if 
agreed to by the applicant, if circumstances so warrant. The 
lessee shall be notified in writing of any determination or 
redetermination and the reasons for and assumptions used for 
such determination. Any determination or redetermination under 
this clause shall be a final agency action. The Secretary's 
determination or redetermination shall be judicially reviewable 
under section 10(a) of the Administrative Procedures Act (5 
U.S.C. 702), only for actions filed within 30 days of the 
Secretary's determination or redetermination.
  (iii) In the event that the Secretary fails to make the 
determination or redetermination called for in clause (ii) upon 
application by the lessee within the time period, together with 
any extension thereof, provided for by clause (ii), no royalty 
payments shall be due on new production as follows:
          (I) For new production, as defined in clause (iv)(I) 
        of this subparagraph, no royalty shall be due on such 
        production according to the schedule of minimum volumes 
        specified in clause (ii) of this subparagraph.
          (II) For new production, as defined in clause 
        (iv)(II) of this subparagraph, no royalty shall be due 
        on such production for one year following the start of 
        such production.
  (iv) For purposes of this subparagraph, the term ``new 
production'' is--
          (I) any production from a lease from which no 
        royalties are due on production, other than test 
        production, prior to the date of enactment of the Outer 
        Continental Shelf Deep Water Royalty Relief Act; or
          (II) any production resulting from lease development 
        activities pursuant to a Development Operations 
        Coordination Document, or supplement thereto that would 
        expand production significantly beyond the level 
        anticipated in the Development Operations Coordination 
        Document, approved by the Secretary after the date of 
        enactment of the Outer Continental Shelf Deep Water 
        Royalty Relief Act.
  (v) During the production of volumes determined pursuant to 
clauses (ii) or (iii) of this subparagraph, in any year during 
which the arithmetic average of the closing prices on the New 
York Mercantile Exchange for light sweet crude oil exceeds 
$28.00 per barrel, any production of oil will be subject to 
royalties at the lease stipulated royalty rate. Any production 
subject to this clause shall be counted toward the production 
volume determined pursuant to clause (ii) or (iii). Estimated 
royalty payments will be made if such average of the closing 
prices for the previous year exceeds $28.00. After the end of 
the calendar year, when the new average price can be 
calculated, lessees will pay any royalties due, with interest 
but without penalty, or can apply for a refund, with interest, 
of any overpayment.
  (vi) During the production of volumes determined pursuant to 
clause (ii) or (iii) of this subparagraph, in any year during 
which the arithmetic average of the closing prices on the New 
York Mercantile Exchange for natural gas exceeds $3.50 per 
million British thermal units, any production of natural gas 
will be subject to royalties at the lease stipulated royalty 
rate. Any production subject to this clause shall be counted 
toward the production volume determined pursuant to clauses 
(ii) or (iii). Estimated royalty payments will be made if such 
average of the closing prices for the previous year exceeds 
$3.50. After the end of the calendar year, when the new average 
price can be calculated, lessees will pay any royalties due, 
with interest but without penalty, or can apply for a refund, 
with interest, of any overpayment.
  (vii) The prices referred to in clauses (v) and (vi) of this 
subparagraph shall be changed during any calendar year after 
1994 by the percentage, if any, by which the implicit price 
deflator for the gross domestic product changed during the 
preceding calendar year.
  (4)(A) The Secretary of Energy shall submit any bidding 
system authorized in subparagraph (H) of paragraph (1) to the 
Senate and House of Respresentatives. The Secretary may 
institute such bidding system unless either the Senate or the 
House of Representatives passes a resolution of disapproval 
within thirty days after receipt of the bidding system.
  (B) Subparagraphs (C) through (J) of this paragraph are 
enacted by Congress--
          (i) as an exercise of the rulemaking power of the 
        Senate and the House of Representatives, respectively, 
        and as such they are deemed a part of the rules of each 
        House, respectively, but they are applicable only with 
        respect to the procedures to be followed in that House 
        in the case of resolutions described by this paragraph, 
        and they supersede other rules only to the extent that 
        they are inconsistent therewith; and
          (ii) with full recognition of the constitutional 
        right of either House to change the rules (so far as 
        relating to the procedure of that House) at any time, 
        in the same manner, and to the same extent as in the 
        case of any other rule of that House.
  (C) A resolution disapproving a bidding system submitted 
pursuant to this paragraph shall immediately be referred to a 
committee (and all resolutions with respect to the same request 
shall be referred to the same committee) by the President of 
the Senate or the Speaker of the House of Representative, as 
the case may be.
  (D) If the committee to which has been referred any 
resolution disapproving the bidding system of the Secretary has 
not reported the resolution at the end of ten calendar days 
after its referral, it shall be in order to move either to 
discharge the committee from further consideration of the 
resolution or to discharge the committee from further 
consideration of any other resolution with respect to the same 
bidding system which has been referred to the committee.
  (E) A motion to discharge may be made only by an individual 
favoring the resolution, shall be highly privileged (except 
that it may not be made after the committee has reported a 
resolution with respect to the same recommendation), and debate 
thereon shall be limited to not more than one hour, to be 
divided equally between those favoring and those opposing the 
resolution. An amendment to the motion shall not be in order, 
and it shall not be in order to move to reconsider the vote by 
which the motion is agreed to or disagreed to.
  (F) If the motion to discharge is agreed to or disagreed to, 
the motion may not be renewed, nor may another motion to 
discharge the committee be made with respect to any other 
resolution with respect to the same bidding system.
  (G) When the committee has reported, or has been discharged 
from further consideration of, a resolution as provided in this 
paragraph, it shall be at any time thereafter in order (even 
though a previous motion to the same effect has been disagreed 
to) to move to proceed to the consideration of the resolution. 
The motion shall be highly privileged and shall not be 
debatable. An amendment to the motion shall not be in order, 
and it shall not be in order to move to reconsider the vote by 
which the motion is agreed to or disagreed to.
  (H) Debate on the resolution is limited to not more than two 
hours, to be divided equally between those favoring and those 
opposing the resolution. A motion further to limit debate is 
not debatable. An amendment to, or motion to recommit, the 
resolution is not in order, and it is not in order to move to 
reconsider the vote by which the resolution is agreed to or 
disagreed to.
  (I) Motions to postpone, made with respect to the discharge 
from the committee, or the consideration of a resolution with 
respect to a bidding system, and motions to proceed to the 
consideration of other business, shall be decided without 
debate.
  (J) Appeals from the decisions of the Chair relating to the 
application of the rules of the Senate or the House of 
Representatives, as the case may be, to the procedure relating 
to a resolution with respect to a bidding system shall be 
decided without debate.
  (5)(A) During the five-year period commencing on the date of 
enactment of this subsection, the Secretary may, in order to 
obtain statistical information to determine which bidding 
alternatives will best accomplish the purposes and policies of 
this Act, require, as to no more than 10 per centum of the 
tracts offered each year, each bidder to submit bids for any 
area of the outer Continental Shelf in accordance with more 
than one of the bidding systems set forth in paragraph (1) of 
this subsection. For such statistical purposes, leases may be 
awarded using a bidding alternative selected at random for the 
acquisition of valid statistical data if such bidding 
alternative is otherwise consistent with the provisions of this 
Act.
  (B) The bidding systems authorized by paragraph (1) of this 
subsection, other than the system authorized by subparagraph 
(A), shall be applied to not less than 20 per centum and not 
more than 60 per centum of the total area offered for leasing 
each year during the five-year period beginning on the date of 
enactment of this subsection, unless the Secretary determines 
that the requirements set forth in this subparagraph are 
inconsistent with the purposes and policies of this Act.
  (6) At least ninety days prior to notice of any lease sale 
under subparagraph (D), (E), (F), or, if appropriate, (H) of 
paragraph (1), the Secretary shall by regulation establish 
rules to govern the calculation of net profits. In the event of 
any dispute between the United States and a lessee concerning 
the calculation of the net profits under the regulation issued 
pursuant to this paragraph, the burden of proof shall be on the 
lessee.
  (7) After an oil and gas lease is granted pursuant to any of 
the work commitment options of paragraph (1) of this 
subsection--
          (A) the lessee, at its option, shall deliver to the 
        Secretary upon issuance of the lease either (i) a cash 
        deposit for the full amount of the exploration work 
        commitment, or (ii) a performance bond in form and 
        substance and with a surety satisfactory to the 
        Secretary, in the principal amount of such exploration 
        work commitment assuring the Secretary that such 
        commitment shall be faithfully discharged in accordance 
        with this section, regulations, and the lease; and for 
        purposes of this subparagraph, the principal amount of 
        such cash deposit or bond may, in accordance with 
        regulations, be periodically reduced upon proof, 
        satisfactory to the Secretary, that a portion of the 
        exploration work commitment has been satisfied;
          (B) 50 per centum of all exploration expenditures on, 
        or directly related to, the lease, including, but not 
        limited to (i) geological investigations and related 
        activities, (ii) geophysical investigations including 
        seismic, geomagnetic, and gravity surveys, data 
        processing and interpretation, and (iii) exploratory 
        drilling, core drilling, redrilling, and well 
        completion or abandonment, including the drilling of 
        wells sufficient to determine the size and area extent 
        of any newly discovered field, and including the cost 
        of mobilization and demobilization of drilling 
        equipment, shall be included in satisfaction of the 
        commitment, except that the lessee's general overhead 
        cost shall not be so included against the work 
        commitment, but its cost (including employee benefits) 
        of employees directly assigned to such exploration work 
        shall be so included; and
          (C) if at the end of the primary term of the lease, 
        including any extension thereof, the full dollar amount 
        of the exploration work commitment has not been 
        satisfied, the balance shall then be paid in cash to 
        the Secretary.
  (8) Not later than thirty days before any lease sale, the 
Secretary shall submit to the Congress and publish in the 
Federal Register a notice--
          (A) identifying any bidding system which will be 
        utilized for such lease sale and the reasons for the 
        utilization of such bidding system; and
          (B) designating the lease tracts selected which are 
        to be offered in such sale under the bidding system 
        authorized by subparagraph (A) of paragraph (1) and the 
        lease tracts selected which are to be offered under any 
        one or more of the bidding systems authorized by 
        subparagraphs (B) through (H) of paragraph (1), and the 
        reasons such lease tracts are to be offered under a 
        particular bidding system.
  (b) An oil and gas lease issued pursuant to this section 
shall--
          (1) be for a tract consisting of a compact area not 
        exceeding five thousand seven hundred and sixty acres, 
        as the Secretary may determine, unless the Secretary 
        finds that a larger area is necessary to comprise a 
        reasonable economic production unit;
          (2) be for an initial period of--
                  (A) five years; or
                  (B) not to exceed ten years where the 
                Secretary finds that such longer period is 
                necessary to encourage exploration and 
                development in areas because of unusually deep 
                water or other unusually adverse conditions,
        and as long after such initial period as oil or gas is 
        produced from the area in paying quantities, or 
        drilling or well reworking operations as approved by 
        the Secretary are conducted thereon;
          (3) require the payment of amount or value as 
        determined by one of the bidding systems set forth in 
        subsection (a) of this section;
          (4) entitle the lessee to explore, develop, and 
        produce the oil and gas contained within the lease 
        area, conditioned upon due diligence requirements and 
        the approval of the development and production plan 
        required by this Act;
          (5) provide for suspension or cancellation of the 
        lease during the initial lease term or thereafter 
        pursuant to section 5 of this Act;
          (6) contain such rental and other provisions as the 
        Secretary may prescribe at the time of offering the 
        area for lease; and
          (7) provide a requirement that the lessee offer 20 
        per centum of the crude oil, condensate, and natural 
        gas liquids produced on such lease, at the market value 
        and point of delivery applicable to Federal royalty 
        oil, to small or independent refiners as defined in the 
        Emergency Petroleum Allocation Act of 1973.
  (c)(1) Following each notice of a proposed lease sale and 
before the acceptance of bids and the issuance of leases based 
on such bids, the Secretary shall allow the Attorney General, 
in consultation with the Federal Trade Commission, thirty days 
to review the results of such lease sale, except that the 
Attorney General, after consultation with the Federal Trade 
Commission, may agree to a shorter review period.
  (2) The Attorney General may, in consultation with the 
Federal Trade Commission, conduct such antitrust review on the 
likely effects the issuance of such leases would have on 
competition as the Attorney General, after consultation with 
the Federal Trade Commission, deems appropriate and shall 
advise the Secretary with respect to such review. The Secretary 
shall provide such information as the Attorney General, after 
consultation with the Federal Trade Commission, may require in 
order to conduct any antitrust review pursuant to this 
paragraph and to make recommendations pursuant to paragraph (3) 
of this subsection.
  (3) The Attorney General, after consultation with the Federal 
Trade Commission, may make such recommendations to the 
Secretary, including the nonacceptance of any bid, as may be 
appropriate to prevent any situation inconsistent with the 
antitrust laws. If the Secretary determines, or if the Attorney 
General advises the Secretary, after consultation with the 
Federal Trade Commission and prior to the issuance of any 
lease, that such lease may create or maintain a situation 
inconsistent with the antitrust laws, the Secretary may--
          (A) refuse (i) to accept an otherwise qualified bid 
        for such lease, or (ii) to issue such lease, 
        notwithstanding subsection (a) of this section; or
          (B) issue such lease, and notify the lessee and the 
        Attorney General of the reason for such decision.
  (4)(A) Nothing in this subsection shall restrict the power 
under any other Act or the common law of the Attorney General, 
the Federal Trade Commission, or any other Federal department 
or agency to secure information, conduct reviews, make 
recommendations, or seek appropriate relief.
  (B) Neither the issuance of a lease nor anything in this 
subsection shall modify or abridge any private right of action 
under the antitrust laws.
  (d) No bid for a lease may be submitted if the Secretary 
finds, after notice and hearing, that the bidder is not meeting 
due diligence requirements on other leases.
  (e) No lease issued under this Act may be sold, exchanged, 
assigned, or otherwise transferred except with the approval of 
the Secretary. Prior to any such approval, the Secretary shall 
consult with and give due consideration to the views of the 
Attorney General.
  (f) Nothing in this Act shall be deemed to convey to any 
person, association, corporation, or other business 
organization immunity from civil or criminal liability, or to 
create defenses to actions, under any antitrust law.
  (g)(1) At the time of soliciting nominations for the leasing 
of lands containing tracts wholly or partially within three 
nautical miles of the seaward boundary of any coastal State, 
and subsequently as new information is obtained or developed by 
the Secretary, the Secretary, in addition to the information 
required by section 26 of this Act, shall provide the Governor 
of such State--
          (A) an identification and schedule of the areas and 
        regions proposed to be offered for leasing;
          (B) at the request of the Governor of such State, all 
        information from all sources concerning the 
        geographical, geological, and ecological 
        characteristics of such tracts;
          (C) an estimate of the oil and gas reserves in the 
        areas proposed for leasing; and
          (D) at the request of the Governor of such State, an 
        identification of any field, geological structure, or 
        trap located wholly or partially within three nautical 
        miles of the seaward boundary of such coastal State, 
        including all information relating to the entire field, 
        geological structure, or trap.
The provisions of the first sentence of subsection (c) and the 
provisions of subsections (e)-(h) of section 26 of this Act 
shall be applicable to the release by the Secretary of any 
information to any coastal State under this paragraph. In 
addition, the provisions of subsections (c) and (e)-(h) of 
section 26 of this Act shall apply in their entirety to the 
release by the Secretary to any coastal State of any 
information relating to Federal lands beyond three nautical 
miles of the seaward boundary of such coastal State.
  (2) Notwithstanding any other provision of this Act, the 
Secretary shall deposit into a separate account in the Treasury 
of the United States all bonuses, rents, and royalties, and 
other revenues (derived from any bidding system authorized 
under subsection (a)(1), excluding Federal income and windfall 
profits taxes, and derived from any lease issued after 
September 18, 1978 of any Federal tract which lies wholly (or, 
in the case of Alaska, partially until seven years from the 
date of settlement of any boundary dispute that is the subject 
of an agreement under section 7 of this Act entered into prior 
to January 1, 1986 or until April 15, 1993 with respect to any 
other tract) within three nautical miles of the seaward 
boundary of any coastal State, or, (except as provided above 
for Alaska) in the case where a Federal tract lies partially 
within three nautical miles of the seaward boundary, a 
percentage of bonuses, rents, royalties, and other revenues 
(derived from any bidding system authorized under subsection 
(a)(1), excluding Federal income and windfall profits taxes, 
and derived from any lease issued after September 18, 1978 of 
such tract equal to the percentage of surface acreage of the 
tract that lies within such three nautical miles. Except as 
provided in paragraph (5) of this subsection, not later than 
the last business day of the month following the month in which 
those revenues are deposited in the Treasury, the Secretary 
shall transmit to such coastal State 27 percent of those 
revenues, together with all accrued interest thereon. The 
remaining balance of such revenues shall be transmitted 
simultaneously to the miscellaneous receipts account of the 
Treasury of the United States.
  (3) Whenever the Secretary or the Governor of a coastal State 
determines that a common potentially hydrocarbon-bearing area 
may underlie the Federal and State boundary, the Secretary or 
the Governor shall notify the other party in writing of his 
determination and the Secretary shall provide to the Governor 
notice of the current and projected status of the tract or 
tracts containing the common potentially hydrocarbon-bearing 
area. If the Secretary has leased or intends to lease such 
tract or tracts, the Secretary and the Governor of the coastal 
State may enter into an agreement to divide the revenues from 
production of any common potentially hydrocarbon-bearing area, 
by unitization or other royalty sharing agreement, pursuant to 
existing law. If the Secretary and the Governor do not enter 
into an agreement, the Secretary may nevertheless proceed with 
the leasing of the tract or tracts. Any revenue received by the 
United States under such an agreement shall be subject to the 
requirements of paragraph (2).
  (4) The deposits in the Treasury account described in this 
section shall be invested by the Secretary of the Treasury in 
securities backed by the full faith and credit of the United 
States having maturities suitable to the needs of the account 
and yielding the highest reasonably available interest rates as 
determined by the Secretary of the Treasury.
  (5)(A) When there is a boundary dispute between the United 
States and a State which is subject to an agreement under 
section 7 of this Act, the Secretary shall credit to the 
account established pursuant to such agreement all bonuses, 
rents, and royalties, and other revenues (derived from any 
bidding system authorized under subsection (a)(1)), excluding 
Federal income and windfall profits taxes, and derived from any 
lease issued after September 18, 1978 of any Federal tract 
which lies wholly or partially within three nautical miles of 
the seaward boundary asserted by the State, if that money has 
not otherwise been deposited in such account. Proceeds of an 
escrow account established pursuant to an agreement under 
section 7 shall be distributed as follows:
          (i) Twenty-seven percent of all bonuses, rents, and 
        royalties, and other revenues (derived from any bidding 
        system authorized under subsection (a)(1)), excluding 
        Federal income and windfall profits taxes, and derived 
        from any lease issued after September 18, 1978, of any 
        tract which lies wholly within three nautical miles of 
        the seaward boundary asserted by the Federal Government 
        in the boundary dispute, together with all accrued 
        interest thereon, shall be paid to the State either--
                  (I) within thirty days of December 1, 1987, 
                or
                  (II) by the last business day of the month 
                following the month in which those revenues are 
                deposited in the Treasury, whichever date is 
                later.
          (ii) Upon the settlement of a boundary dispute which 
        is subject to a section 7 agreement between the United 
        States and a State, the Secretary shall pay to such 
        State any additional moneys due such State from amounts 
        deposited in or credited to the escrow account. If 
        there is insufficient money deposited in the escrow 
        account, the Secretary shall transmit, from any 
        revenues derived from any lease of Federal lands under 
        this Act, the remaining balance due such State in 
        accordance with the formula set forth in section 
        8004(b)(1)(B) of the Outer Continental Shelf Lands Act 
        Amendments of 1985.
  (B) This paragraph applies to all Federal oil and gas lease 
sales, under this Act, including joint lease sales, occurring 
after September 18, 1978.
  (6) This section shall be deemed to take effect on October 1, 
1985, for purposes of determining the amounts to be deposited 
in the separate account and the States' shares described in 
paragraph (2).
  (7) When the Secretary leases any tract which lies wholly or 
partially within three miles of the seaward boundary of two or 
more States, the revenues from such tract shall be distributed 
as otherwise provided by this section, except that the State's 
share of such revenues that would otherwise result under this 
section shall be divided equally among such States.
  (h) Nothing contained in this section shall be construed to 
alter, limit, or modify any claim of any State to any 
jurisdiction over, or any right, title or interest in, any 
submerged lands.
  (i) In order to meet the urgent need for further exploration 
and development of the sulphur deposits in the submerged lands 
of the outer Continental Shelf, the Secretary is authorized to 
grant to the qualified persons offering the highest cash 
bonuses on a basis of competitive bidding sulphur leases on 
submerged lands of the outer Continental Shelf, which are not 
covered by leases which include sulphur and meet the 
requirements of subsection (a) of section 6 of this Act, and 
which sulphur leases shall be offered for bid by sealed bids 
and granted on separate leases from oil and gas leases, and for 
a separate consideration, and without priority or preference 
accorded to oil and gas lessees on the same area.
  (j) A sulphur lease issued by the Secretary pursuant to this 
section shall (1) cover an area of such size and dimensions as 
the Secretary may determine, (2) be for a period of not more 
than ten years and so long thereafter as sulphur may be 
produced from the area in paying quantities or drilling, well 
reworking, plant construction, or other operations for the 
production of sulphur, as approved by the Secretary, are 
conducted thereon, (3) require the payment to the United States 
of such royalty as may be specified in the lease but not less 
than 5 per centum of the gross production of value of the 
sulphur at the wellhead, and (4) contained such rental 
provisions and such other terms and provisions as the Secretary 
may by regulation prescribe at the time of offering the area 
for lease.
  (k)(1) The Secretary is authorized to grant to the qualified 
persons offering the highest cash bonuses on a basis of 
competitive bidding leases of any mineral other than oil, gas, 
and sulphur in any area of the outer Continental Shelf not then 
under lease for such mineral upon such royalty, rental, and 
other terms and conditions as the Secretary may prescribe at 
the time of offering the area for lease.
  (2)(A) Notwithstanding paragraph (1), the Secretary may 
negotiate with any person an agreement for the use of Outer 
Continental Shelf sand, gravel and shell resources--
          (i) for use in a program of, or project for, shore 
        protection, beach restoration, or coastal wetlands 
        restoration undertaken by a Federal, State, or local 
        government agency; or
          (ii) for use in a construction project, other than a 
        project described in clause (i), that is funded in 
        whole or in part by or authorized by the Federal 
        Government.
  (B) In carrying out a negotiation under this paragraph, the 
Secretary may assess a fee based on an assessment of the value 
of the resources and the public interest served by promoting 
development of the resources. No fee shall be assessed directly 
or indirectly under this subparagraph against a Federal, State, 
or local government agency.
  (C) The Secretary may, through this paragraph and in 
consultation with the Secretary of Commerce, seek to facilitate 
projects in the coastal zone, as such term is defined in 
section 304 of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1453), that promote the policy set forth in section 303 
of that Act (16 U.S.C. 1452).
  (D) Any Federal agency which proposes to make use of sand, 
gravel and shell resources subject to the provisions of this 
Act shall enter into a Memorandum of Agreement with the 
Secretary concerning the potential use of those resources. The 
Secretary shall notify the Committee on Merchant Marine and 
Fisheries and the Committee on Natural Resources of the House 
of Representatives and the Committee on Energy and Natural 
Resources of the Senate on any proposed project for the use of 
those resources prior to the use of those resources.
  (l) Notices of sale of leases, and the terms of bidding 
authorized by this section shall be published at least thirty 
days before the date of sale in accordance with rules and 
regulations promulgated by the Secretary.
  (m) All moneys paid to the Secretary for or under leases 
granted pursuant to this section shall be deposited in the 
Treasury in accordance with section 9 of this Act.
  (n) The issuance of any lease by the Secretary pursuant to 
this Act, or the making of any interim arrangements by the 
Secretary pursuant to section 7 of this Act shall not prejudice 
the ultimate settlement or adjudication of the question as to 
whether or not the area involved is in the outer Continental 
Shelf.
  (o) The Secretary may cancel any lease obtained by fraud or 
misrepresentation.
  (p) Leases, Easements, or Rights-of-way for Energy and 
Related Purposes.--
          (1) In general.--The Secretary, in consultation with 
        the Secretary of the Department in which the Coast 
        Guard is operating and other relevant departments and 
        agencies of the Federal Government, may grant a lease, 
        easement, or right-of-way on the outer Continental 
        Shelf for activities not otherwise authorized in this 
        Act, the Deepwater Port Act of 1974 (33 U.S.C. 1501 et 
        seq.), the Ocean Thermal Energy Conversion Act of 1980 
        (42 U.S.C. 9101 et seq.), or other applicable law, if 
        those activities--
                  (A) support exploration, development, 
                production, or storage of oil or natural gas, 
                except that a lease, easement, or right-of-way 
                shall not be granted in an area in which oil 
                and gas preleasing, leasing, and related 
                activities are prohibited by a moratorium;
                  (B) support transportation of oil or natural 
                gas, excluding shipping activities;
                  (C) produce or support production, 
                transportation, or transmission of energy from 
                sources other than oil and gas; or
                  (D) use, for energy-related purposes or for 
                other authorized marine-related purposes, 
                facilities currently or previously used for 
                activities authorized under this Act, except 
                that any oil and gas energy-related uses shall 
                not be authorized in areas in which oil and gas 
                preleasing, leasing, and related activities are 
                prohibited by a moratorium.
          (2) Payments and revenues.--(A) The Secretary shall 
        establish royalties, fees, rentals, bonuses, or other 
        payments to ensure a fair return to the United States 
        for any lease, easement, or right-of-way granted under 
        this subsection.
          (B) The Secretary shall provide for the payment of 27 
        percent of the revenues received by the Federal 
        Government as a result of payments under this section 
        from projects that are located wholly or partially 
        within the area extending three nautical miles seaward 
        of State submerged lands. Payments shall be made based 
        on a formula established by the Secretary by rulemaking 
        no later than 180 days after the date of enactment of 
        this section that provides for equitable distribution, 
        based on proximity to the project, among coastal states 
        that have a coastline that is located within 15 miles 
        of the geographic center of the project.
          (3) Competitive or noncompetitive basis.--Except with 
        respect to projects that meet the criteria established 
        under section 388(d) of the Energy Policy Act of 2005, 
        the Secretary shall issue a lease, easement, or right-
        of-way under paragraph (1) on a competitive basis 
        unless the Secretary determines after public notice of 
        a proposed lease, easement, or right-of-way that there 
        is no competitive interest.
          (4) Requirements.--The Secretary shall ensure that 
        any activity under this subsection is carried out in a 
        manner that provides for--
                  (A) safety;
                  (B) protection of the environment;
                  (C) prevention of waste;
                  (D) conservation of the natural resources of 
                the outer Continental Shelf;
                  (E) coordination with relevant Federal 
                agencies;
                  (F) protection of national security interests 
                of the United States;
                  (G) protection of correlative rights in the 
                outer Continental Shelf;
                  (H) a fair return to the United States for 
                any lease, easement, or right-of-way under this 
                subsection;
                  (I) prevention of interference with 
                reasonable uses (as determined by the 
                Secretary) of the exclusive economic zone, the 
                high seas, and the territorial seas;
                  (J) consideration of--
                          (i) the location of, and any schedule 
                        relating to, a lease, easement, or 
                        right-of-way for an area of the outer 
                        Continental Shelf; and
                          (ii) any other use of the sea or 
                        seabed, including use for a fishery, a 
                        sealane, a potential site of a 
                        deepwater port, or navigation;
                  (K) public notice and comment on any proposal 
                submitted for a lease, easement, or right-of-
                way under this subsection; and
                  (L) oversight, inspection, research, 
                monitoring, and enforcement relating to a 
                lease, easement, or right-of-way under this 
                subsection.
          (5) Lease duration, suspension, and cancellation.--
        The Secretary shall provide for the duration, issuance, 
        transfer, renewal, suspension, and cancellation of a 
        lease, easement, or right-of-way under this subsection.
          (6) Security.--The Secretary shall require the holder 
        of a lease, easement, or right-of-way granted under 
        this subsection to--
                  (A) furnish a surety bond or other form of 
                security, as prescribed by the Secretary;
                  (B) comply with such other requirements as 
                the Secretary considers necessary to protect 
                the interests of the public and the United 
                States; and
                  (C) provide for the restoration of the lease, 
                easement, or right-of-way.
          (7) Coordination and consultation with affected state 
        and local governments.--The Secretary shall provide for 
        coordination and consultation with the Governor of any 
        State or the executive of any local government that may 
        be affected by a lease, easement, or right-of-way under 
        this subsection.
          (8) Regulations.--Not later than 270 days after the 
        date of enactment of the Energy Policy Act of 2005, the 
        Secretary, in consultation with the Secretary of 
        Defense, the Secretary of the Department in which the 
        Coast Guard is operating, the Secretary of Commerce, 
        heads of other relevant departments and agencies of the 
        Federal Government, and the Governor of any affected 
        State, shall issue any necessary regulations to carry 
        out this subsection.
          (9) Effect of subsection.--Nothing in this subsection 
        displaces, supersedes, limits, or modifies the 
        jurisdiction, responsibility, or authority of any 
        Federal or State agency under any other Federal law.
          (10) Applicability.--This subsection does not apply 
        to any area on the outer Continental Shelf within the 
        exterior boundaries of any unit of the National Park 
        System, National Wildlife Refuge System, or National 
        Marine Sanctuary System, or any National Monument.
  (q) Internet-Based Oil and Gas Lease Sales.--
          (1) In general.--In order to modernize the Nation's 
        offshore leasing program to ensure the best return to 
        the Federal taxpayer, reduce fraud, and ensure a fair 
        and competitive leasing process, the Secretary may 
        conduct lease sales under this section through 
        Internet-based, sealed-bidding methods.
          (2) Sale requirements.--Sales conducted under 
        paragraph (1) shall ensure--
                  (A) a publicly and freely accessible digital 
                delivery of the bid reading process, such as 
                live Internet streaming, and an option for 
                bidders to submit bids electronically;
                  (B) a bidder verification process that 
                discloses to bidders, by no later than 5 p.m. 
                Central Time of the day before each sale, a 
                list of all bids submitted (including the 
                person submitting each bid) on each lease tract 
                without disclosing bid amounts;
                  (C) the ability for a bidder to correct a 
                possible misreading of a submitted bid;
                  (D) a designee from within the Office of the 
                Solicitor of the Department of the Interior to 
                act as an independent, third-party observer who 
                will be present during the bid reading process 
                to prevent wrongdoing, independently certify 
                the bidding process, and maintain transparency;
                  (E) data security measures to ensure bidder 
                data is kept secure; and
                  (F) a participant survey soliciting voluntary 
                feedback from bidders on the bidding process.
          (3) Transparency in sale-day statistics.--
                  (A) Requirement.--The Secretary shall 
                publicly disclose statistical data regarding 
                each lease sale under this subsection, on the 
                day the sale is executed.
                  (B) Included data.--Among data disclosed, the 
                Secretary shall include--
                          (i) the total value of high bids;
                          (ii) the number of tracts offered;
                          (iii) the number of acres offered;
                          (iv) the number of tracts receiving 
                        bids;
                          (v) the number of acres receiving 
                        bids;
                          (vi) the total number of bids;
                          (vii) the average number of bids per 
                        tract;
                          (viii) the total number of bidders 
                        participating;
                          (ix) bidding statistics by water 
                        depth;
                          (x) the name of the entity that 
                        submitted each bid, the amount of the 
                        bid, and the tract for which the bid 
                        was submitted;
                          (xi) of tracts receiving bids, the 
                        number of bids per tract by water 
                        depth;
                          (xii) the tract receiving the 
                        greatest number of bids;
                          (xiii) the tract receiving the 
                        highest bid; and
                          (xiv) any other statistical data that 
                        may be disclosed in accordance with 
                        this Act.
                  (C) Data transparency.--The Secretary shall 
                ensure all data regarding lease sales under 
                this subsection is publicly available and 
                easily accessible, free of charge, on the 
                Internet, including for download and 
                aggregation in machine-readable format.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    While I respect the goals of openness, transparency, and 
fair return for the taxpayer in offshore lease sales as laid 
out by the sponsors of H.R. 5577, I fear that the impact of the 
bill would be to actually reduce the levels of openness and 
transparency in the offshore lease sale process, while 
providing little additional benefit for taxpayers.
    Moving offshore oil and gas lease sales online diminishes 
the opportunities for public access and participation in the 
process. Ever since the Deepwater Horizon tragedy, there has 
been tremendous public interest in where offshore drilling 
would be allowed to take place, if it should be allowed at all. 
Over 300 people attended a recent offshore lease sale in order 
to make their opposition to offshore drilling heard, and moving 
lease sales online will only result in shutting those voices 
out without addressing any of their concerns.
    Furthermore, because of the sealed-bid nature of the 
offshore leasing process, it isn't clear how having companies 
submit those bids electronically would result in a better 
return for the taxpayer. Instead of mailing a bid into the 
Bureau of Ocean Energy Management, companies would instead 
simply email the exact same bid. In fact, the expense of 
setting up a new online system could actually result in a cost 
to taxpayers, rather than a better return.
    It is disappointing that the Administration has already 
taken steps to limit public participation, such as shutting the 
public out of the August 2016 Western Gulf of Mexico offshore 
lease sale. This is an unfortunate trend that I believe H.R. 
5577 will only exacerbate, and for that reason I cannot support 
the bill.

                                  Raul M. Grijalva,
                                            Ranking Member,
                                    Committee on Natural Resources.

                                  [all]